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As of April 27, 1995
Bird Corporation
and Bird Incorporated
980 Washington Street
Suite 120
Dedham, Massachusetts 02026
Re: Asset Purchase Agreement dated as of September 23,
1994, as amended (the "Asset Purchase Agreement"),
among Bird Corporation, Bird Incorporated and
Jannock, Inc.
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Ladies and Gentlemen:
Pursuant to Section 1.03 of the Asset Purchase Agreement,
Jannock, Inc., a Delaware corporation ("Buyer"), has the option
(the "Option"), exercisable on or before noon on April 28, 1995, to
acquire from Bird Incorporated, a Massachusetts corporation
("Seller"), all the outstanding capital stock (the "Holding Stock")
of Bird-Kensington Holding Corp., a Delaware corporation
("Holding"). Terms defined in the Asset Purchase Agreement are
used herein as therein defined.
Buyer has advised Seller that it is willing to exercise
the Option to acquire the Holding Stock on the Kensington Closing
Date, subject to satisfaction of the conditions set forth in
Sections 8.06 through 8.14 and Section 13.02 of the Asset Purchase
Agreement, only upon the further condition that the Asset Purchase
Agreement be amended and supplemented in the manner hereinafter
provided. Seller has advised Buyer that it desires that Buyer
exercise the Option and acquire the Holding Stock.
Accordingly, Parent, Seller and Buyer, intending to be
legally bound hereby, agree that the Asset Purchase Agreement shall
be amended and supplemented as follows:
1. On or before to the Kensington Closing Date, Seller
(a) shall have caused Kensington Partners (i) to make the revisions
and adjustments in its financial statements as of March 31, 1995
and for the periods then ended specified on Schedule 1 hereto and
(ii) pay all Federal, State and local taxes, including withholding,
sales and unemployment taxes, and all related interest and
penalties payable by Kensington Partners with respect to all
periods ending on or before March 31, 1995, including any amounts
being contested ("Prior Period Taxes"), (iii) to pay all
unsatisfied judgments or other liens set forth on Part C of
Schedule 2 hereto (Part C Liens") recorded on the books of
Kensington Partners, (iv) to record on the books of Kensington
Partners, add to Schedule 1 hereto and pay any liabilities secured
by Part C Liens which Seller reasonably determines are appropriate
and which are not currently recorded on such books and (v) to pay
all amounts of rent due under leases of the Kensington artners
Facility securing the Financings and (b) shall have invested
sufficient funds in the equity of Kensington Partners such that the
net partnership equity of Kensington Partners, computed in
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accordance with generally accepted accounting principles as of
March 31, 1995 and following the revisions and adjustments referred
to herein, shall not be less than $1,150,000; provided, however,
that the aggregate amount which Seller shall be required to invest
in Kensington Partners pursuant to this paragraph 1 between the
date hereof and the Kensington Closing Date shall not exceed
$5,100,000 and all payments required to be made pursuant to this
paragraph 1 shall be made out of such funds so invested. Following
the Kensington Closing Date, any refunds of any amounts paid by
Kensington Partners in respect of Prior Period Taxes shall be
promptly paid to Seller. Seller and Parent shall jointly and
severally indemnify and hold harmless Buyer from and against any
and all Damages suffered by Buyer resulting from, arising out of,
or in connection with any claims in respect of Prior Period Taxes
and liabilities secured by Part C Liens.
2. On or before the Kensington Closing Date, Seller will
cause the interest of Kensington Partners in the partnership, and
the rights and obligations of Kensington Partners under the
Partnership Agreement, referred to in Item K.4. of Schedule 4.17 to
the Asset Purchase Agreement and the interest of Holding in the
partnership, and the rights and obligations of Holding under the
Partnership Agreement, referred to in Item K.5. of Schedule 4.17 of
the Asset Purchase Agreement, to be transferred to and assumed by
Seller. Further, on or before the Kensington Closing Date, Seller
will cause the rights and obligations of Kensington Partners under
the agreements referred to in Items F.3. and F.4. of Schedule 4.17
to the Asset Purchase Agreement to be transferred to and assumed by
Seller.
3. In addition to the conditions set forth in
Sections 8.06 through 8.14 and Section 13.02 of the Asset Purchase
Agreement, the obligation of Buyer to pay the Additional Purchase
Price and acquire the Holding Stock shall be subject to the due
execution and delivery of the following agreements, in form and
substance reasonably satisfactory to Buyer, by the following
parties on or before the Kensington Closing Date:
a. A supply agreement between Kensington Partners
and Jones & Brown, Inc. (""J&B") covering the annual
purchase of windows by J&B from Kensington Partners at a
volume reasonably satisfactory to Buyer, which supply
agreement shall have a term of not less than five years.
b. An agreement of sale between Holding and ZES,
Inc. pursuant to which ZES, Inc. shall have sold all of
the interest of ZES, Inc. in Kensington Partners to
Holding.
c. An amendment to the lease agreement ("Lease
Agreement") between Lila Snyder ("Mrs. Snyder") and
Kensington Partners relating to the Kensington Partners
Facility pursuant to which (i) the rent thereunder is
fixed in an amount equal, from time to time, to the
payments due under the four financings listed on Part A
of Schedule 2 hereto (the "Financings") secured by the
Kensington Partners Facility, (ii) Mrs. Snyder grants
Kensington Partners an option to acquire the Kensington
Partners Facility and (iii) Kensington Partners is
granted the right to cure landlord defaults under the
Financings, including the failure to pay taxes, and to
pay rent directly to the Financing parties.
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d. Assignments executed by J&B or ZES, Inc., as
appropriate, transferring and assigning to Kensington
Partners all right, title and interest of the assigning
party in and to (i) the trademarks listed on
Schedule 4.25 to the Asset Purchase Agreement, (ii) the
lease dated April 1, 1992 between Regency Management
Services and J&B regarding heat mirror equipment, and
(iii) each other agreement reflected on Part B of
Schedule 2 hereto and each other asset reflected on the
books of Kensington Partners on the Kensington Closing
Date as an asset of Kensington Partners and not
heretofore transferred to it.
e. Consents to assignment by (i) Amplicon, Inc.
with respect to the lease agreement dated as of
September 20, 1993 between Amplicon, Inc. and Kensington
Partners, (ii) Southwall Technologies, Inc. ("Southwall")
with respect to the Value-Added Reseller Agreement dated
as of May 9, 1991 between Southwall and Kensington
Manufacturing Co., and (iii) the lessors under the
equipment leases listed as items 1, 2, 6 and 7 on Part B
of Schedule 2 hereto.
f. Releases (and UCC-3's) or similar documents
reasonably satisfactory to Buyer executed by each person
who holds a lien against the Kensington Partners
Facility, other than the parties to the Financings and
the lessors (or their assigns) under the equipment leases
listed in Part B of Schedule 2 hereto, including without
limitation each person who holds a Part C Lien; PROVIDED,
HOWEVER, that the parties hereto acknowledge and agree
that any and all payments required to satisfy any
judgments and liens described in this paragraph 3.f shall
be made only out of the funds invested by Seller in
Kensington Partners pursuant to paragraph 1 hereof.
g. A computer support agreement between Kensington
Partners and J&B pursuant to which J&B agrees to provide
the computer services to Kensington Partners which it is
currently providing for a period of 12 months following
the Kensington Closing Date at a cost of $12,000 per
month.
h. An agreement by ZES, Inc., J&B, Mrs. Snyder and
Barry D. Snyder (individually, a "Snyder Party" and
collectively, the "Snyder Parties") in which each Snyder
Party (i) releases Kensington Partners, Holding and Buyer
from and against any liability each may have to such
Snyder Party other than any such liability, in the case
of Mrs. Snyder, under the Lease Agreement, as amended as
contemplated in clause(c) above, in the case of J&B,
under the agreements referred to in clauses(a) and (g)
above and, in the case of each of the Snyder Parties,
accounts payable and other liabilities incurred by
Kensington Partners in the ordinary course of business
and reflected on the Kensington Closing Balance Sheet and
(ii) agrees not to compete with Kensington Partners or
Holding in the manufacture of polyvinyl chloride
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replacement windows such noncompetition agreement to be
on terms reasonably acceptable to Buyer.
4. On or before the Kensington Closing Date, the Seller
shall take such action as shall be necessary to cause the condition
set forth in Section 8.14 of the Asset Purchase Agreement to be
satisfied including but not limited to the execution, delivery and
filing of appropriate UCC-3 termination statements evidencing the
satisfaction of such condition.
5. The liabilities and obligations of Kensington
Partners or Holding incurred in connection with or resulting from
(a) the matters or agreements referred to in, Schedule 4.16 and
Schedule 4.17, Items F.3., F.4., K.4. and K.5., and (b) any other
liabilities of Kensington Partners or Holding incurred in
connection with or resulting from the interest of either in North
American Installation Company, Quantum II Partners ("Quantum II"),
Permalite and Window Systems of Cleveland (the "Third Party
Ventures") shall, for purposes of Article X of the Asset Purchase
Agreement, be deemed Retained Liabilities; PROVIDED, HOWEVER, that
"normal and customary product warranty claims for windows"
manufactured and sold by Kensington Partners in connection with the
activities of the Third Party Ventures shall be deemed Assumed
Liabilities and PROVIDED FURTHER that the term "normal and
customary warranty claims for windows" shall exclude all claims
relating to the installation by any Third Party Venture of any
windows and all claims relating to the manufacture or sale of
Quantum II products not manufactured to customer specifications and
supplied by Kensington Partners to NewPro, Ambassador, Permalite or
Window Systems of Cleveland. Buyer shall cause Holding to
cooperate with Seller in connection with the Retained Liabilities
in this paragraph 5 and make available to Seller or its designee
replacement parts on commercially reasonable terms and prices. The
penultimate sentence of Section 10.04(c) of the Asset Purchase
Agreement shall not apply to the Retained Liabilities referred to
in this paragraph or to the breach by Seller of its covenants
contained in paragraphs 1, 2 and 4 of this letter agreement.
6. Seller and Parent agree to join with Buyer in making
an election under section 338(h)(10) of the Internal Revenue Code
of 1986 (the "Code") and under any comparable provisions of state,
local, or foreign law with respect to the purchase of the Holding
Stock. As promptly as practicable following delivery of the
Kensington Closing Balance Sheet, Buyer shall execute and deliver
to Parent five copies of Internal Revenue Service Form 8023, a
preliminary draft of which Form shall have been provided to, and
reviewed and approved by, Parent at least 5 days prior to the
Kensington Closing Date. Unless such Form differs materially from
the draft thereof previously provided to Parent, Parent shall
promptly execute and redeliver such Form to Buyer. Seller and
Parent shall comply with all of the requirements of section
338(h)(10) of the Code and the Treasury Regulations thereunder.
Seller and Parent shall take no action which is inconsistent with
the requirements for filing the election under section 338(h)(10)
of the Code and the applicable Treasury Regulations. Seller and
Parent agree that to the extent that an election similar to an
election under section 338(h)(10) of the Code is optional under any
state, local, or foreign law, Seller and Parent shall join in any
such election as requested in writing by Buyer.
7. Within 30 days following the Kensington Closing Date,
Buyer shall deliver to Seller a balance sheet, prepared in
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accordance with the generally accepted accounting principles
consistently applied, reflecting the assets and liabilities of
Holding as of the Kensington Closing Date (the "Kensington Closing
Balance Sheet"). The preparation of the Kensington Closing Balance
Sheet, objections thereto and the resolution of disputes with
respect thereto shall be dealt with in the manner contemplated by
Sections 3.01 and 3.02 of the Asset Purchase Agreement with respect
to the Closing Balance Sheet which provisions are hereby included
herein MUTATIS MUTANDIS except that appropriate changes shall be
made to reflect the fact that Buyer shall prepare the Kensington
Closing Balance Sheet, the Kensington Closing Balance Sheet shall
not be audited and the limitations contained in Section 3.02(b)
shall not be applicable. In the event that the amount of net
equity reflected with Kensington Closing Balance Sheet is less than
$1,050,000, Seller shall pay to Buyer such difference and in the
event such amount is more than $1,250,000 Buyer shall pay to Seller
such difference.
8. Upon execution and delivery of this letter agreement
by Seller, Parent and Buyer, this letter agreement shall constitute
the exercise by Buyer of the Option, subject to the satisfaction on
or before the Kensington Closing Date of the conditions set forth
in the Asset Purchase Agreement, as amended and supplemented
hereby, required to be satisfied on or before such Date.
9. The parties shall take such steps as are necessary to
cause the Kensington Closing Date to occur on Tuesday May 30, 1995
with effect from 7:00 a.m. on that date or as promptly as
practicable thereafter.
If the foregoing accurately represents the understanding
of the parties to the Asset Purchase Agreement with respect to the
subject matter hereof, please execute and return the enclosed
copies of this letter agreement, whereupon it shall become a
binding agreement among us and a binding amendment and supplement
to the Asset Purchase Agreement. The parties hereto hereby confirm
that the Asset Purchase Agreement, as amended and supplemented
hereby, remains in full force and effect.
Very truly yours,
Jannock, Inc.
By
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Michael A. Risso
President
Agreed to:
Bird Corporation
By:
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Joseph D. Vecchiolla
Chairman and Chief Executive Officer
Bird Incorporated
By:
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Joseph D. Vecchiolla
Chairman and Chief Executive Officer